Hugh - here's something (update) to read while you wait:
NHC Communications Inc. announces important progress in its penetration of the ILEC and large carrier market worldwide
Company also receives $2.7 million insurance claim and provides business update on other selected specifics
MONTREAL, April 30 /PRNewswire/ - NHC Communications Inc. (TSE: NHC - news), a leading provider of carrier class test access and deployment solutions for the copper- based telecommunications and Internet access markets, today announced it has shipped its ControlPoint(TM) solutions to a second Incumbent Local Exchange Carrier (ILEC) for two First Office Applications (FOAs). The Company has also shipped its ControlPoint(TM) solutions to a large European ILEC and two Inter- Exchange Carriers (IXCs) for their evaluation. By the end of May 2001, a total of eight large telecommunications carriers, including five North American ILECs and one European ILEC are planned to be in different stages of analysis of ControlPoint(TM).
``Between the eight large carriers that the Company is currently working with, ControlPoint(TM) is being tested under FOAs or trials for various broadband DSL and voice line-management based applications in both remote unmanned and city center central offices,'' said Sylvain Abitbol, President and CEO of NHC Communications. ``These eight ILECs and IXCs represents a solid base, for a wide range of applications and presents us with a very large potential market.''
The Company is at different stages of the sales cycle in the context of its current discussions with ILECs and IXCs in North America and Europe for the sale of its ControlPoint(TM) solutions. The trials serve as an initial endorsement of carriers' needs to improve broadband DSL provisioning times and voice line-management based applications, and are normally performed by the lab department of a carrier. FOAs are performed much further in the purchasing decision process of a carrier. At this point, the carrier has decided to dedicate important internal resources of different departments to the analysis and documentation of the performance of a product in a live telecommunications environment.
In all cases, including NHC's recently announced ILEC agreement, the procedures and processes are on schedule and progressing as planned.
``The ILEC and IXC accounts are difficult to penetrate and normally involve long product adoption cycles. However, NHC's ControlPoint(TM) solutions significantly reduce the operating costs of providing service and provide carriers with very short pay-back periods on their investments. This fact, combined with significant technological advantages, is a key factor that explains our success and our penetration efforts of those accounts for this particular market niche,'' added Mr. Abitbol.
Business Update on Other Selected Specifics
$2.7 Million cash-inflow in addition to the previously announced $10
Million from the Bought-Deal transaction
The Company received a payment of $2.7 million from the Export Development Corporation (EDC) through an insurance claim related to the outstanding balance receivable from a contract with a CLEC customer. NHC's insurance covered $2.7 million of the $3.9 million shipment delivered to the CLEC last year.
``This CLEC has eased back on its deployment schedule, but plans to continue to install NHC's ControlPoint(TM) solutions in several new central offices,'' said Mr. Abitbol. ``Although we do not expect further orders from this customer in fiscal 2001, this CLEC is very pleased with our technology, which will be utilized as deployment plans progress.''
Negotiations are underway between NHC, the EDC and the CLEC customer for the remaining balance of $1.2 million. Any potential write-down of any portion of this balance receivable would be offset against deferred revenue and would not have an adverse impact on future results.
The $2.7 million collected will be accounted as revenue for the third quarter of fiscal 2001, in accordance with the Company's new accounting policy on revenue recognition.
On March 30, NHC closed a financing agreement through the sale of 3,335,000 units, consisting of one common share and one half of one common share purchase warrant. The units were priced at $3 per unit, for total gross proceeds of $10 million. In addition, each full warrant entitles the holder to purchase one common share of NHC at a purchase price of $4 until March 29, 2003. If fully exercised, these warrants will provide NHC with an additional $6.67 million in capital.
NHC remains confident that it will be able to execute its focused growth strategy successfully. The Company has a strong management team worldwide and well-financed targeted customers. These customers have expressed a strong need for NHC's ControlPoint(TM) solutions, which are helping them to accelerate their deployment plans, while at the same time providing them with a very quick pay-back period for their investment. Concurrently, the cash provided from collection of the insurance claim, along with the cash generated by the proceeds of the financing and the potential proceeds from this same financing, are improving NHC's financial structure to support its growth. NHC plans to continue investing in its pre and post-sales infrastructure at the Company's US subsidiary, NHC Communications USA, Inc., which is considered to be a key aspect to satisfying the support requirements of the larger telecommunications carriers.
``Our ability to raise capital in these conditions points to the financial markets' confidence in NHC's ability to execute its business plan,'' continued Mr. Abitbol.
Europe and Asia
NHC continues to address the European market through its French subsidiary NHC Europe S.A. NHC's penetration of this market has been developing faster than anticipated. The Company has recently completed lab trials with a major European ILEC and is currently planning a field FOA in the near future. Moreover, and in accordance with its previously announced focused growth strategy, negotiations are underway for partnerships that are expected to support NHC's expansion plans for the European territory. ``This is a very important market for NHC, and we are facing some exciting opportunities there,'' said Mr. Abitbol.
The Asian DSL market is also booming. In November 2000, NHC announced an agreement with Taiwan-based distributor Delhum Technology & Services Corp (DTSC). Through this agreement, NHC is very well positioned to address this growing market. According to Chong Hwa Telecom, a Taiwanese ILEC, the DSL market in Taiwan alone is expected to grow by more than 1.2 million subscribers by the end of fiscal 2001.
Market Outlook
NHC has not received any indication from its customers or potential customers that capital expenditure in the Company's particular market niche is declining. ``The telecommunications carriers with whom we are currently in discussions have reiterated their plans to maintain their investment in the DSL market, and we believe that NHC has the leading physical-layer cross- connect solution,'' said Mr. Abitbol. ``Each ControlPoint(TM) unit can manage seven times the capacity of the largest competing product. Additionally, our solution is based on reliable, cost-effective robotic technology.''
With increasing demand for high-speed Internet access, and pressure from regulators to speed up deployment plans, the global DSL market remains strong. Demand for DSL service is driving an increase in the number of changes in telecommunications connections - changes that NHC's ControlPoint(TM) solutions are specifically designed to handle. As a result, the Company remains optimistic that sales of its ControlPoint(TM) solutions will strengthen. |
